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Emerging Powers and Global Challenges Programme
F e b r u a r y 2 011
India and Africa: Towards
a Sustainable Energy
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About SAIIA
The South African Institute of International Affairs (SAIIA) has a long and proud record
as South Africa’s premier research institute on international issues. It is an independent,
non-government think-tank whose key strategic objectives are to make effective input into
public policy, and to encourage wider and more informed debate on international affairs
with particular emphasis on African issues and concerns. It is both a centre for research
excellence and a home for stimulating public engagement. SAIIA’s occasional papers
present topical, incisive analyses, offering a variety of perspectives on key policy issues in
Africa and beyond. Core public policy research themes covered by SAIIA include good
governance and democracy; economic policymaking; international security and peace;
and new global challenges such as food security, global governance reform and the
environment. Please consult our website www.saiia.org.za for further information about
SAIIA’s work.
A b o u t t h e E M E R G I N G P O W E R S an d g l o b a l
c h a l l e ng e s P r o gramm e
The global system has undergone significant changes in the past two decades since the
collapse of the Berlin Wall. While advanced industrial powers such as the US, Europe and
Japan are still the driving forces of global policymaking, there is now a shift to non-polarity,
interpolarity or multipolarity. Global interdependence has made international co-operation
an inescapable reality and emerging powers such as Brazil, Russia, India, and China (BRIC)
cannot be ignored in global governance processes. This new paradigm touches on a
range of global challenges such as security, the G20, climate change and energy security.
SAIIA’s Emerging Powers and Global Challenges Programme has a two-pronged
focus. The first is regional or country-specific looking at the engagement between the BRIC
countries and key African states. The second critically evaluates the responses of emerging
powers to global governance challenges, assessing the extent to which they are prepared
to shoulder responsibility. This intersection or the balance between norms and interests and
its implications for South Africa and Africa is an important feature of SAIIA’s research.
The Emerging Powers and Global Challenges project entitled ‘Africa and the Geopolitics
of India’s Energy Security’ was funded by the Konrad Adenauer Stiftung and the Royal
Norwegian Ministry of Foreign Affairs. SAIIA gratefully acknowledges this support.
Programme head: Mzukisi Qobo [email protected]
© SAIIA February 2011
All rights are reserved. No part of this publication may be reproduced or utilised in any form by any
means, electronic or mechanical, including photocopying and recording, or by any information or
storage and retrieval system, without permission in writing from the publisher. Opinions expressed are
the responsibility of the individual authors and not of SAIIA.
Please note that all currencies are in US$ unless otherwise indicated.
A b s t ra c t
The depletion of hydrocarbon resources, due to unprecedented growth in energy demand
from developing countries, concerns over the disruption of energy supplies arising from
political instability in the Middle East and the emergence of energy ‘nationalism’ in some
oil-producing states, has resulted in major and emerging economies shifting their focus to
finding alternative energy sources. To a large extent, Africa has emerged as a reliable and
alternative supply source, particularly for oil and natural gas. However, this has resulted in
a ‘scramble’ by various countries to gain access to the continent’s vast energy and mineral
resources. Unfortunately the focus is on resource extraction instead of resource generation,
which has created a number of problems for Africa’s people by turning what should have
been an asset into a curse. More importantly, the resulting imbalance in the development
of the continent’s economy and growth could perpetuate Africa’s status as an energy-poor
continent. Under these circumstances, can Africa emerge as an effective and sustainable
energy source that will contribute to the stability of the world energy market? Conversely,
can the continent’s energy (and mineral) resources become an instrument for its economic
development and provide the wherewithal for a better standard of living for its people? And
finally, can India, through its long-standing, traditional ties and large diaspora, successfully
build partnerships with African states that will be different from those of other countries
exploiting the continent’s resource wealth? This study looks at the evolving energy-based
relationship between Africa and India and makes some recommendations on how India
should embed its policy and energy ties in Africa in a developmental framework.
A BOUT THE A UTHO R
Shebonti Ray Dadwal is a research fellow with the Institute for Defence Studies and Analyses,
specialising in energy security. She previously worked as senior editor at The Financial
Express and has served as deputy secretary at the National Security Council Secretariat,
Government of India. She has published several peer-reviewed papers on energy security
and related issues. In 2002 she published a book, Rethinking Energy Security in India, and is
currently writing her second book, The Politics of Energy and Climate Change. In 2009 she
was awarded the Chevening Fellowship by the Foreign and Commonwealth Office of the
United Kingdom after completing a course in Economics of Energy at the Institute for Energy
Research and Policy at the University of Birmingham. She was a member of the Steering
Committee on Energy at the Council on Security Co-operation in the Asia Pacific, and is
currently a member of the Steering Committee of the Confederation of Indian Industry.
E merging P o w ers an d G lobal C h allenges P rogramme
A b b r e v ia t i o ns an d A c r o n y ms
bcm
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EU
LNG
mbd
mmscmd
Mt
mtoe
MW
ONGC
OVL
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billion cubic metres
exploration and production
European Union
liquefied natural gas
million barrels per day
million metric standard cubic metres per day
million tonnes
million tonnes of oil equivalent
megawatt
Oil and Natural Gas Corporation
ONGC Videsh Limited
United States
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Introduction
T
he world is on the brink of a potential reordering of the global energy market, both for
consumers and producers. Until recently, the Organisation for Economic Co-operation
and Development countries were the largest consumers of energy, the vast energy reserves
of the West Asian (Middle East) region were the bulwark of the world’s energy supplies
(mainly oil) and the US was the guarantor of steady and affordable supplies to the world
oil market. However, post 9/11, the diversification of supplies has become the mantra
espoused by most countries that are increasingly dependent on energy imports. Given the
fact that the Persian Gulf region’s supplies are prone to disruption, alternative countries
and regions are being sought to ensure that importers’ energy supplies are secured. African
countries have emerged as a crucial supply source, which has led to a ‘scramble’ to gain
access to the continent’s vast energy and mineral resources. However, can Africa emerge
as an effective alternative energy source that will contribute to the stability of the world
energy market? Conversely, can the continent’s energy (and mineral) resources become
an instrument for its economic development and provide the wherewithal for a better
standard of living for all its peoples? What are the factors that are impeding the continent’s
economic and infrastructural development? Finally, is India’s partnership with African
states any different from that of other countries seeking to exploit the continent’s resource
wealth? And, if so, how does it differ? This study looks at the evolving energy-based
relationship between Africa and India and assesses the merits and demerits of India’s
energy strategy; whether the strategy is any different from the strategies and policies of
other actors present on the continent, and whether it has the wherewithal to evolve into
a policy based on co-operation that will succeed in moving beyond the narrow confines
of the energy trade to a more long-term, sustainable and mutually beneficial partnership?
This study ends with recommendations on how India should embed its African policy and
energy ties in a developmental framework.
I n d ia an d A f ri c a : L o ng - s t an d ing t i e s
India’s ties with African nations have a long and traditional history, based on common
experiences with colonisation and subsequent freedom struggles. Soon after independence
in 1947, at the behest of its first Prime Minister Jawaharlal Nehru, India became a champion
of the anti-colonial struggle with a special focus on Africa. This was supplemented by
the Non-Aligned Movement during the Cold War era. However, during this era India–
African ties remained limited, even marginal, as India struggled to deal with issues in and
around its own neighbourhood, including several conflicts. Nevertheless, the large Indian
diaspora that existed in several African countries ensured shared linkages, which were
more sociocultural than economic ties. Certainly, energy issues did not figure in relations
between African countries and India, partly because energy was not perceived as a national
security issue, and partly because slow economic growth and the lack of industrialisation
meant a low demand for energy.
For the Indian government, any energy issues were focused on oil imports. Natural gas
comprised a very small portion of India’s energy requirements and was reserved mainly for
use in the fertiliser sector, while coal, which was and continues to be the bedrock of India’s
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power sector, was produced indigenously. By 1990, India was importing around 50% of
its oil requirements. However in 1991, following the rise in global oil prices due to the
Iraq–Kuwait war, India found itself in a worse situation than many other countries. Not
only was India highly dependent on Kuwaiti and Iraqi crude supplies, but also escalating
international crude prices had resulted in India’s oil import bill increasing by about 60%
in 1990–91, around 40% above the 1989–90 figure. Exacerbating the effect of the oil price
increase was a more permanent disruption of oil supplies from Iraq with which India had
long-term supply contracts.1
The fiscal fiasco that India faced prodded its policymakers into thinking about
formulating an energy security policy, which nevertheless took place at a slow pace. Part
of the problem when defining such a strategy was India’s highly disaggregated energy
sector, which meant several ministries looked at various aspects of energy, usually in a
non-synchronised fashion, and sometimes adopted policies that were at cross-purposes
with one another.
However, with the end of the Cold War, which coincided with its economic liberalisation
reforms, India’s foreign policy became increasingly pragmatic and less ideological, focusing
increasingly on economic and social development and trade expansion, not least to attract
investments into all sectors, particularly its critical infrastructure sectors. Consequently,
India attempted to improve relations with Western countries like the US and the European
Union (EU), as well as Russia. It also began strengthening ties with the South-East Asian
countries as part of its ‘Look East’ policy. In so doing, India appeared to be guilty of
neglecting its earlier strong relations with other parts of the developing world, including
Africa.
I n d ia ’ s En e rg y C o mp u l si o ns an d S t ra t e g y
Only in the mid–1990s, when the importance of energy for sustained economic growth
became apparent, did India begin to realise the need for an energy security policy.
Nonetheless, several more years would pass before any concrete policy emerged. In July
2005, an Energy Co-ordination Committee (chaired by the prime minister) was constituted
to enable a systematic approach to policy formulation, promote co-ordination in interdepartmental action and function as a key mechanism for providing institutional support
to decision-making in the area of energy planning and security. The other members of the
committee included the ministers of finance, petroleum and natural gas, power, coal, nonconventional energy sources, as well as the National Security Advisor and senior officials
from the ministries, including the Atomic Energy Commission. Finally, in August 2006,
an Integrated Energy Policy report was published, which looked at enhancing India’s energy
security in a holistic and sustainable manner. Energy was now perceived as critical for
fulfilling India’s development agenda, as the Integrated Energy Policy explains:2
India faces formidable challenges in meeting its energy needs and in providing adequate
energy of desired quality in various forms in a sustainable manner and at competitive prices.
India needs to sustain an 8% to 10% economic growth rate, over the next 25 years, if it is to
eradicate poverty and meet its human development goals. To deliver a sustained growth rate
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of 8% through 2031–32 and to meet the lifeline energy needs of all citizens, India needs, at
the very least, to increase its primary energy supply by three to four times and its electricity
generation capacity/supply by five to six times of their 2003–04 levels. With 2003–04 as the
base, India’s commercial energy supply would need to grow from 5.2% to 6.1% per annum,
while its total primary energy supply would need to grow at 4.3% to 5.1% annually.
It is clear that India faces a daunting energy challenge and requires access to increasing
supplies of sustained and affordable energy resources.
India’s coal reserves are substantial but of poor quality, with the result that India is
now accused of being one of the largest emitters of carbon and is under pressure to cut
emissions. Over the last 10 years, India has been importing high-quality coal and currently
imports around 80–100 million tonnes (Mt) of coal. According to the head of Northern
Coalfields, one of India’s state-owned coal mining companies, by 2020 coal imports are
projected to nearly triple, to 250 Mt per year, in order to meet the country’s plans to
increase power generation capacity by 100 000 megawatt (MW) over the next 10 years.3
India’s imports of oil and gas have grown rapidly, due to the country’s low resource
base: India has around 5.4 billion barrels (750 Mt) of crude oil reserves and 1 074 billion
cubic metres (bcm) of natural gas reserves.4 The problem is that oil production has
stagnated in recent years, while demand has grown exponentially, by 3–5% annually. India
is the fourth-largest oil consumer globally and the sixth-largest oil importer. By 2008–09, 5
oil imports reached nearly 2.4 million barrels per day (mbd), representing 75% of total
consumption. The majority of oil imports currently come from the Middle East region
and, based on the growing demand and no expected major increase in production, this
dependency is projected to increase to over 90% by 2030.
The natural gas scenario is more positive, following the discovery of some major gas
reserves in India’s deep offshore basins. Nevertheless, by 2015, India’s natural gas demand
is expected to almost double, to 230–320 million metric standard cubic metres per day
(mmscmd). Much will depend on the growth of the domestic gas market, as the demand
for gas may well increase (from the current 166 mmscmd) if climate change pressures
force India to look at replacing much of its coal-based power generation with gas. By
2015, domestic production is expected to increase to 254 mmscmd, while 58 mmscmd
will be imported in the form of liquefied natural gas (LNG). Currently, India produces
around 132 mmscmd from domestic fields and the rest is met by LNG imports.6 As of now,
India imports all its LNG from Qatar, although negotiations are taking place with other
countries for future LNG supplies.
As the above shows, energy security, along with food and water security, is top of
the country’s national imperatives. With a burgeoning population, many of whom have
little or no access to modern forms of energy, and a goal of poverty eradication by 2020,
the role of energy is undeniable if India is to sustain its high economic growth and
its quest for global leadership. Moreover, India’s policymakers have to ensure that the
goal of providing modern forms of energy to all the citizens is met at the least cost to
the environment. Hence, while India’s energy strategy focuses on increasing domestic
production in all energy sectors (non-renewable and renewable) an overriding concern for
India’s policymakers is the country’s growing dependence on imports.
This concern is reflected in the Integrated Energy Policy document which states that:7
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The growing dependence on energy imports raises several concerns. India’s requirements
of fossil fuels for the year 2030 based on various scenarios (Business as Usual, Low Growth
and High Growth scenarios) are projected to be 337 to 462 million tonnes of oil (2 460–
3 372 million barrels), 99–184 million tonnes of oil equivalent (mtoe) of gas and 602 to
954 mtoe of coal. If the global fossil fuel supply increases by only 1.7%, as projected by the
International Energy Agency, will India get all the energy that it needs even if it is willing
and able to pay the price? What will India do if supply is disrupted due to events outside
its control? Also in a situation of conflict, an oil blockage may be imposed against India….
How do we keep our economy going in such a situation? … The threat to energy security
arises not just from the uncertainty of availability and price of imported energy, but also
from the possible disruption or shortfalls in domestic production.
To address these concerns, India’s policymakers have formulated an international
dimension for its energy strategy that includes finding multiple supply options and energy
resources.
Based on this broad framework, India’s international energy strategy entails the
following:8
• Expanding and diversifying supply sources for hydrocarbons and, more recently, tying
up sources for uranium supplies following the nuclear suppliers group waiver.
• Offering downstream co-operation in refineries, pipeline projects and other energyrelated infrastructure.
• Offering stakes in the domestic energy sector through its National Exploration and
Licensing Policy programme, not only to gain access to state-of-the-art technology for
enhanced oil and gas recovery, but also to exploit clean-coal technology and renewable
energy resources.
• Encouraging Indian companies to partner with their international counterparts and to
participate in projects such as the International Thermonuclear Experimental Reactor,
a joint international project involving research and development related to fusion
power.
• Encouraging Indian state-owned and private energy companies to acquire assets,
through the purchase of equity in oil, gas and coal blocks or stakes in exploration and
production (E&P) companies abroad.
At the 9th Petrotech 2010 convention, Prime Minister Manmohan Singh spoke of India’s
wish to build strong, mutually beneficial economic partnerships with other hydrocarbonproducing countries and their oil and gas industries. He stated that ‘hydrocarbons will
continue to be our major source of energy for quite some time in the future.… The
demand in India over the next 10 years will increase by over 40%, whereas the increase
in supply from maturing oilfields is expected to be around 12%.’ 9 He reiterated the
government’s policy of focusing on the pursuit of equity in oil and gas opportunities
overseas.
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T h e r o l e o f A f ri c a in I n d ia ’ s e n e rg y s t ra t e g y
Africa has always been an important source of minerals and raw materials (including
energy resources), but in terms of sheer quantities, Africa’s resource base in hydrocarbons
is no match for that of the Middle East. However, following the events of 9/11, the Middle
East is perceived as a region increasingly susceptible to instability where extremism is
gaining ground, which in turn raises doubts about its status as a stable supplier. As a
result, energy-importing countries are incorporating a diversification strategy into their
energy policies. Soon after the demise of the Soviet Union, a rush ensued to gain access to
the newly independent Central Asian countries’ energy resources. More recently, Africa’s
energy resources have caught the interest of the world powers. Africa is increasingly being
seen as an important alternative to the Middle East’s hydrocarbon reserves. Although far
less than those of the Persian Gulf, Africa contains 9% of the world’s oil reserves (and
contributes around 13% of global oil production); 7.9% of the world’s natural gas reserves;
5% of coal reserves (of which South Africa with 3.7% comprises the bulk); and 38% of
uranium reserves. Over the next 10–15 years, most of the new oil entering the world
market is forecast to come from Africa.10
Some of the other reasons why Africa has become a favoured destination for energy
seekers include the following:11
• New technological advances mean that Africa’s deep offshore resources have become
accessible and available.
• African oil reserves are located offshore, which negates the construction of
infrastructure to transport the same to ports for export.
• The high quality of African crude oil makes it easy for processing.
• African nations grant favourable contractual terms (profit-sharing agreements) to
international and national oil companies.
As one of the largest consumers and importers of hydrocarbons, a priority for India is
building and strengthening ties with oil- and gas-rich countries. Energy plays a role
not only in the country’s socio-economic and development goals, but also in its aim to
emerge as a major regional, and eventually global, economic power. India’s traditional
energy policy was essentially oil-based and West Asian-centric. However, the country was
forced to devise a supply diversification policy because of the perceived instability, and
consequent potential for supply disruption, and the fact that India was denied preferential
treatment by its traditional suppliers, even during periods of crisis. Africa as an important
energy supplier now assumes special significance in India’s foreign and energy policy.
Although in many ways a latecomer to Africa’s energy sector, limited to oil trade with
Nigeria, India has realised the importance of developing stronger and more enduring
linkages with Africa’s energy and other sectors. The deep inroads made by Chinese
companies have meant that, despite its long-standing ties with the continent, India has
taken a backseat to China in Africa. This perception was strengthened when Indian and
other international oil companies lost out to their Chinese counterparts, who linked
business with diplomacy to acquire oil and gas assets. The Chinese strategy of establishing
joint ventures that extend beyond oil and gas to construction, infrastructure development
and, in some cases, arms seemed to serve Chinese companies well in Africa.
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In many ways, India’s strategies for accessing Africa’s hydrocarbon sector are similar to
those of China, offering economic and infrastructure assistance (in the form of soft loans)
in exchange for access to energy resources. India currently gets around 18% of its oil
imports from Africa and, over the last few years, has increased its presence in the energy
sector of several African countries. India’s largest national oil company, Oil and Natural
Gas Corporation (ONGC), through its overseas division ONGC Videsh Limited (OVL),
has aggressively sought stakes in Africa’s E&P sector. In 2005, it teamed up with Londonbased Arcelor, the world’s largest steel maker owned by Indian Lakshmi Mittal, to form
a new entity, ONGC Mittal Energy Limited, and signed a $6 billion infrastructure deal
with Nigeria in exchange for extensive access to production blocks. Subsequently, OVL
acquired a 25% stake in Sudan’s Greater Nile Oil Project (overcoming resistance from the
China National Petroleum Corporation, which had a 40% stake in the project) and some
minority interests in two other blocks in Sudan. Another Indian national oil company,
Indian Oil Corporation, acquired an offshore block in Côte d’Ivoire,12 while in January
2010 ONGC signed a memorandum of understanding with Sonangol, Angola’s state oil
company, in which both companies agreed to boost co-operation in the areas of exploration
and refining, signifying a big step forward in India’s efforts to enter the Angolan market,
hitherto dominated by Western and Chinese companies.13 Other Indian oil companies
have bought stakes in oil and gas blocks in Burkina Faso, Equatorial Guinea, Ghana,
Guinea-Bissau and Senegal. Beyond hydrocarbons, Indian companies have also invested
in countries with large mineral resources, such as Vedanta Resources’ stake in Zambia’s
copper mines and a public–private Indian group’s investment in Senegal’s rock phosphate
mines, which has led to a perception that India’s focus in Africa has been on West Africa’s
resource-rich countries.14
Finally, monitoring the waters of the Indian Ocean, particularly off Africa’s east coast,
is an essential part of India’s national security policy. Any disruption can have disastrous
consequences for India’s economic and energy security, given that nearly 90% of imports,
including almost all energy imports, are sea-based. The recent upsurge in piracy off
Somalia is another area of concern. Therefore, an issue, which drives India’s desire to
strengthen its presence in Africa, is co-operation with Indian Ocean littorals to monitor
these vital sea lanes.15
S t r e ng t h s an d w e a k n e ss e s in I n d ia – A f ri c a r e l a t i o ns
in t h e e n e rg y ar e na
Energy resources may be a major attraction for external powers, but several issues need to
be addressed before Africa can emerge as an important energy source, which in turn will
help the continent’s development:16
• The track record of many of Africa’s energy-exporting countries, which failed to
transform their hydrocarbon resources into economic growth in the 1970s and 1980s.
Instead, Africa’s energy wealth became a ‘curse’ and prevented the continent from
taking its rightful place in the world economic order.
• African governments may have received financial windfalls from energy sales, but in
most cases the only beneficiaries were the political leadership and elite who entered
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into partnerships with oil companies. In effect, the countries have become ‘rentier’
states, where the leadership is not accountable to the people. The result has been
socio-economic disparities due to poor governance, corruption and nepotism, leading
to political instability and hiccups in production, and thereby contributing to oil price
volatility at regular intervals.
• As hydrocarbons became the key export commodity and source of government revenue,
other sectors of the economy, in particular the manufacturing and agricultural sectors
that traditionally employed a majority of the African population, were neglected,
leading to acute food shortages and poverty.
• The pursuit of a neo-mercantilist and neo-colonial approach to energy extraction in
Africa has led not only to the non-development of local industry, but also in some cases
to its demise by triggering imports of cheap manufactured goods.
• Many of the external players involved in Africa’s energy sector have tended to treat
the host country as a provider of raw materials, without any regard for the concurrent
development of downstream and auxiliary sectors. This situation could in time lead to
Africa becoming a resource-poor country, dependent on energy imports.
India has placed its Africa energy ties within a broader ambit, having learned its lesson
from the 1972 Ugandan experience, when Indians were driven out on the grounds that
they were exploiting the country’s wealth without contributing to its development.
Terming its engagement with Africa as ‘distinct and different from any other’17, New Delhi
is in the process of evolving a model that combines resource extraction with long-term
industry development in the host country or region. According to JP Pham, a senior
fellow and director of the Africa Project at the New York-based National Committee on
American Foreign Policy, India has adopted a policy of adding value to its investments and
is attempting to integrate itself into the economy, rather than simply viewing the country
as ‘a supply depot for resources’. The rationale is that helping Africa to develop allows for
a more conducive and sustainable relationship between the two regions. He calls this a
‘hybrid model’, a cross between the Western model, which largely uses a strategy of private
investment in Africa, and the Chinese and Russian models, which are state-driven.18 Hence,
the Indian government is not only keen on buying more crude oil, sourcing larger volumes
of LNG and investing in more upstream opportunities, but is also investing in capacity
building, human resource and infrastructure development, bridging the information gap,
forging closer cultural contacts by lending ‘skills, talent and technology’ to Africa, and
taking up community development programmes in various countries. As India’s External
Affairs Minister SM Krishna said when speaking about the distinctive features of India’s
Africa policy, ‘We are committed to go by the priorities and wishes of our African friends,
in crafting programmes of co-operation through a consultative process.’19
African governments seem to have received this policy well, judging by the response of
some African leaders who attended the launch of the India–Africa Forum Summit in 2008.
Many said that they appreciated India’s development-centric approach and lauded India
as a rising economic and knowledge power. In an Africa Quarterly interview ahead of the
2008 summit held in New Delhi, former Ghana President John Kufuor said that, ‘If India’s
experience is married to Africa’s vast natural resources, it will result in the accelerated
development of Africa and assist African countries to develop their production base of nontraditional exports as well as add value to their traditional exports.’ Togo’s Prime Minister
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Gilbert Fossoun Houngbo added, ‘What is very interesting and appealing is the Indian
model of co-operation. India is a developing country but has achieved much. Africa can,
therefore, learn from the trajectory of development in India and the Indian experience.’20
India’s African focus also seems to have succeeded in delivering dividends: bilateral
trade has increased from $24,986 billion in 2006–07 to $39,542 billion in 2008–09, and
the target set for 2015 is $70 billion.21 While this looks impressive, it loses some of its
sheen when compared to Africa’s trade with China, which amounted to $106.8 billion in
2008. Moreover, China’s investments in Africa total approximately $8 billion, four times
the size of India’s investment in Africa.
India recognises the challenges to its endeavour to build deeper linkages with African
nations, and the serious competition it faces from other nations pursuing similar ties
with Africa. However, what is more important is how African countries view India’s
policy, notwithstanding the encouraging statements of African leaders at the India–Africa
conclaves, and how receptive African states would be to its implementation. As Pham
points out, the response varies from country to country.22 Democratically accountable
nations with regular, competitive elections are more likely to prefer India’s long-term
engagement policy that goes beyond simple resource extraction. However, as their terms
are tenuous, military juntas or autocratic regimes prefer to deal with countries that are
mainly looking for short-term gains. Host governments can gain huge revenues when
countries, present in Africa for the sole purpose of extracting resources, leave decisions
about revenue spending to their hosts and do not contribute to technology transfers and
skills formation.
While China may seem to have a greater share of and leverage in the African market,
India does have some advantages. In many ways India is better placed to understand the
challenges facing African countries, as not so long ago it faced similar challenges and risks
related to governance, security, infrastructure, and regulation – experiences that can be
shared with the African people. Unlike some countries that have been accused of adopting
a short-term, mercantilist approach based on resource extraction, India’s approach to
African countries should be development-oriented, with the focus being on India’s longterm interest in Africa based on a template of training, technological assistance and trade.
At the same time, tremendous opportunities exist for companies that can deliver lowcost, high-tech products in various sectors including energy, particularly renewable energy,
healthcare, education, telecommunication, manufacturing, and agriculture.
B e y o n d o i l an d gas : r o a d map f o r a m o r e s u s t aina b l e
par t n e rs h ip
Africa’s first priority is to use its energy resources to meet the development needs of its
people. Very few of Africa’s hydrocarbon resources are being used domestically and,
while some governments may reap rich dividends in oil and gas revenue, the people
at large do not benefit. Indeed, several examples exist where the discovery of natural
resources has been followed by economic instability, conflict and environmental damage.
Furthermore, most African countries lack the technology, human resource skills and
adequate infrastructure needed to convert their natural resources into modern and usable
forms of energy; as a recent report of the World Energy Council states, ‘Africa is the least
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illuminated continent of the world’, with less than 20% of its population having access
to electricity.23 Without adequate energy infrastructure, both for industry, agriculture and
residential purposes, African nations will continue to suffer from under-development.
India can provide assistance to African governments in its development agenda, as it
has gone through similar experiences on its developmental path. However, such assistance
would require private and public Indian companies to increase their investments in the
African energy infrastructure sector and to expand and develop a pool of expertise within
the continent. India has already initiated the Pan-African e-Network in partnership with
the African Union, which links all 53 African states through tele-medicine, education and
governance and plays a crucial role in fostering skills and human resources, all of which
are required for Africa to develop in a sustainable way. Furthermore, as Foreign Minister
Krishna announced in his opening address at the India–Africa Summit, India will establish
19 institutions to develop human resources and capacities in Africa, including the Africa–
India Institute of Foreign Trade, the Africa–India Diamond Institute, the Africa–India
Institute of Information Technology and the Africa–India Institute of Education Planning
and Administration. An additional 10 vocational training institutes and five human
settlement institutes will also be established.24
India should also introduce initiatives in Africa to promote green technologies
and to create expertise in the rural electrification process. It should also partner with
African companies to produce alternative energy sources, as most African countries
do not have large hydrocarbon resources and, those that do, require more sustainable
and cleaner forms of energy to combat climate change pressures. As the first and only
country with a dedicated Ministry of New and Renewable Energy, India is well suited to
provide assistance in this area to African countries. The country has a long experience of
developing indigenous, non-traditional energy resources – solar, wind and biogas – and
its share of renewable energy has grown to around 10% of overall generation capacity.
Some of the leading wind turbine manufacturers in the world are Indian. India also has
an ambitious, national solar energy programme, whose goal is to generate some 20 000
MW of solar power, and is currently in the process of reviewing its biofuel programme.
African countries can emulate such programmes and, like in the pharmaceutical industry,
India can provide cheap and locally adapted technology to exploit Africa’s rich renewable
energy potential.
Most African states are well-suited to exploit the huge potential in renewable energy
resources, particularly solar energy, given that the continent receives an average of 6
kilowatt-hour of solar energy per square metre every day. Moreover, as concerns over
climate change rise, Africa will find itself under increasing pressure to find low-carbon
alternatives to traditional fuels. Currently,an estimated 560 million people live without
electricity in sub-Saharan Africa and 625 million rely on solid fuels such as wood or coal
for cooking.
The number of renewable energy conferences held in various parts of the continent
clearly shows that African leaders realise the potential of renewable energy, and the
importance of developing capacity in this sector, to address their long-term demand
for energy. At the March 2009 India–Africa conclave in New Delhi aimed at outlining
a roadmap for India and Africa to work together, both sides saw great potential for
co-operation in the power and non-conventional energy resources sectors, as well as energy
conservation and transfer technology through the generation of renewable energy.
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Several initiatives have been taken with a view to address climate change issues and
to look at alternatives to hydrocarbons.25 However, an impediment has been the lack of
access to green technology, while the recent global financial crisis has seen funds and loans
from foreign donors dry up in this sector. For example, some of Kenya’s renewable energy
projects, including the Turkana Wind Power, the largest wind farm in sub-Saharan Africa
with a capacity of 300 MW and Olkaria 4, the country’s biggest geothermal power project
with a capacity of 280 MW, have not been able to reach financial closure after lenders
pressed for sovereign guarantees and enhanced risk mitigation packages.
In entering a period of re-engagement with Africa, India must be aware that it is not
alone in its attempt to build and strengthen linkages with the continent. Nor can it match
the pace and extent of the engagement of other powers such as China, the EU or the
US. Nevertheless, India in many ways appears to be emulating the Chinese model in
Africa, albeit with less success, particularly in the hydrocarbon sector. Given that some
of China’s policies have come in for censure, India must be careful that its approach to
Africa is not also perceived as mercantilist, interested only in resource extraction. So
far, censure against India is more muted, thanks to India’s democratic principles as well
as its comparatively lower profile in Africa.26 However, this may change in the future,
particularly as India’s presence and profile on the continent grows, which is already the
case in Sudan. India’s Africa policy is also perceived as lacking coherence and vision and
thus fails to capitalise on the goodwill the country enjoys on the continent. India needs
to carefully etch out its African policy by developing a distinct paradigm which, while
continuing and strengthening its energy ties with relevant African nations, takes care to
embed its energy access and acquisition policy in a developmental framework.
India should make the most of the advantages it has over other countries, such as the
traditional ties based on a similar colonial heritage, the goodwill that exists between India
and African countries and a keenness to enhance level of relations. African countries
and India have largely agrarian economies with a vast pool of human resources. African
countries can gain from India’s development curve and learn how the Indian government
has sought to empower its people by investing in their capabilities and by widening their
development options. However, while government-to-government linkages are necessary,
the relationship will be more as a facilitator, particularly in the case of India. In fact, India’s
officials think that the association with Africa should and will be powered by the private
sector, with the focus being on employment generation instead of importing a workforce.
Much of this thinking is because India’s economic and industrial growth will be driven by
the private sector or by public–private participation. Moreover, the substantial interests in
Africa that several private players already have can be enhanced, albeit with more support
from the government.
Judging from the reaction and statements of several African leaders, India’s Africa policy
appears to have met with some success. However, India should take care not to waiver from
its policy of non-intrusive partnership with Africa as enunciated by its former Minister of
State for External Affairs Shashi Tharoor at the sixth India–Africa business conclave:27
The model of our co-operation with Africa is clearly one seeking mutual benefit through a
consultative process. We do not wish to go and demand certain rights or projects or impose
our ideas in Africa. But we do want to contribute to the achievement of Africa’s development
objectives as they have been set by our African partners.
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En d n o t e s
1
Virmani A, ‘India’s 1990–91 crisis: Reforms, myths and paradoxes’, Planning Commission
Working Paper No. 4 /2001-PC, http://plannincommission.gov.in/reports/wrkpapers/wp_
cris9091.pdf.
2
Government of India, Planning Commission, Integrated Energy Policy: Report of the Expert
Committee, Overview, New Delhi, August 2006.
3
Hill M, ‘Indian coal imports to almost triple by 2020’, Mining Weekly.com, 14 September 2010,
www.miningweekly.com/article/indian-coal-imports-to-almost-triple-by-2020-2010-09-14.
4
Government of India, Ministry of Petroleum and Natural Gas, ‘Basic Statistics on Indian
Petroleum & Natural Gas 2008–09’, New Delhi, www.petroleum.nic.in/petstat.pdf.
5
Ibid.
6
India Brand Equity Foundation (IBEF), Oil & Gas, July 2010, www.ibef.org/industry/oilandgas.
aspx.
7
Government of India, Planning Commission, Integrated Energy Policy: Report of the Expert
Committee, Overview. New Delhi: Government of India, August 2006, pp. 55.
8
Government of India, Planning Commission, ibid, pp. 1–16.
9
Financial Express, ‘Oil demand to go up 40% in 10 yrs, cos must explore overseas, says PM’, 2
January 2010, www.financialexpress.com/news/Oil-demand-to-go-up-40-in10-yrs-cos-mustexplore-overseas-says-PM/705677.
10 Shikwati J, ‘Africa as a new frontier’, in Beri R & UK Sinha (eds), Africa and Energy Security:
Global Issues, Local Responses. New Delhi: Academic Foundation, 2009, pp. 41–42.
11 Ibid.
12 Pham JP, ‘India’s expanding relations with Africa and their implications for US Interests’,
American Foreign Policy Interests, 29, 2007, pp. 341–352.
13 Walters D, ‘Indo–African relations: Is the elephant playing catch-up with the dragon?’,
Consultancy Africa Intelligence, 16 June 2010, www.consultancyafrica.com/index.
php?option=com_content&view-article&id-435:indo-africa-relations-is-the-elephant-playingcatch-up-with-the-dragon=58:discussion-papers&itemid=236.
14 Pham JP, op. cit.
15 Vines A & B Oruitemeka, India’s Engagement with the African Indian Ocean Rim States, Africa
Programme Paper, AFP P 1/08. London: Chatham House, 4 April 2008, www.chathamhouse.
org.uk/files/11293_india_africa0408.pdf.
16 Habiyaremye A & L Soete, The Global Financial Crisis and Africa’s “immiserizing wealth”,
Research Brief, 1. New York: United Nations University, 2010, http://unu.edu/publications/
briefs/policy-briefs/2010/UNI_ResearchBrief_10-01.pdf.
17 Chand M (ed.), ‘India’s ties with Africa distinct from others: Sharma’, Africa Quarterly, 50,
1, February–April 2010, p. 9, http://indiaafricaconnect.in/africa%20quaterly/Feb-April-2010.
pdf.
18 Sheikh F, ‘India facing fierce competition in its search for oil and natural gas resources’,
Oilprice.com, 24 December 2009, http://oilprice.com/Geo-Politics/ASia/India-Facing-FierceCompetition-in-its-Search-for-Oil-and-Natural-Gas-Resources.html.
19 Hindustan Times, ‘India to share poverty reduction strategies with Africa’, 12 October 2010.
20 Chand M, ‘Comparing India with China in Africa’, Africa Quarterly, 50, 1, February–April
2010, pp. 14–21, http://indiaafricaquarterky.in/africa%20quaterly/Feb-April-201.pdf.
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21 Naidu S, ‘India stepping up the ante in African relations’, Pambazuka News, 25 March 2010,
www.pambazuka.org/en/category/africa_china/63296.
22 Pham JP, op. cit., p. 9.
23 Statement by Abdoulie Janneh, UN under-secretary general and executive secretary of
Economic Commission for Africa at the conference on Financing for Development, Accra,
Ghana, 30 May 2007, quoting World Energy Council Report, www.uneca.org/eca_resources/
speeches/janneh/2007/070530_speech_janneh.htm.
24 Walters D, op. cit.
25 For example, the African Renewable Energy Network on Combating Desertification and Green
Wall for the Sahara Initiative.
26 Naidu S, ‘India’s African relations: Playing catch-up with the dragon’, UCLA, African Studies
Center, www.international.ucla.edu/media/files/84.pdf.
27 India News Magazine, ‘Tharoor unveils Indian model of engagement with Africa’, 15 March
2010, http://indianewsmagazine.com/tharoor-unveils-indian-model-of-engagement-withafrica/.
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S A I I A ’ s f u n d ing P r o f i l e
SAIIA raises funds from governments, charitable foundations, companies and individual
donors. Our work is currently being funded by among others the Bradlow Foundation, the
United Kingdom’s Department for International Development, the European Commission,
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International Institute for Sustainable Development, INWENT, the Konrad Adenauer
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Development Cooperation Agency, the Canadian International Development Agency,
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